Infosys falls 3% after hitting new high: What went wrong?

Moneycontrol Bureau

Shares of Infosys went for tailspin in the intial hour of trading. The stock opened at Rs 1199.95 per share, up 3 percent from previous close just as it declared September quarter results. Its Q2 dollar revenue growth climbed to highest level in 16 quarters, at USD 2392 million, up 6 percent while was up 6.9 percent to USD 2392 million in constant currency terms.

Rupee revenue in July-September quarter rose 8.9 percent quarter-on-quarter to Rs 15,635 crore. Net profit increased 12.1 percent sequentially to Rs 3,398 crore during the quarter.

However, the stock fell off the cliff within minutes and touched intraday low of Rs 1108.90 per share, hitting as low as 5 percent. News of lowering dollar revenue and CFO Rajiv Bansal's resignation led the stock into a tizzy soon after. The country's second largest IT company has slashed its FY16 dollar revenue guidance to 6.4-8.4 percent from 7.2-9.2 percent (in dollar terms), though it has maintained guidance at 10-12 percent in constant currency.

Though the stock hit all-time high at Rs 1219 per share, investors continue to sell it after the initial euphoria.

Should you buy now?

Dipan Mehta, member BSE and NSE says Infosys remains a positive bet. According to him, the current correction is an opportunity for investors.

Moshe Katri, IT industry analyst is also bullish on the results and suggests looking at the long-term strategy of the management.Katri is confident of the company meeting the FY16 constant currency guidance of 10-12 percent and match industry growth.

Even Nilesh Shah of Envision Capital is upbeat on the results and says that downward revision of the dollar guidance could purely be because of currency reasons. 

"If it is only to do with the currency and the strength on the dollar versus rest of the currencies globally I don’t think that could be a source of worry or a source of apprehension because all the other parameters in terms of deal wins and getting some of the larger customers and scaling them up I think all those are positives. So, the underlying business momentum continues to be very good," he says in an interview to CNBC-TV18.

At 10:33 hrs Infosys was quoting at Rs 1,142.45, down Rs 25.40, or 2.17 percent on the BSE.